Multiple GST rates may create disputes: Montek Singh Ahluwalia

AHMEDABAD: Even as the central government is trying to resolve pending issues with regard to Goods and Services Tax (GST), Montek Singh Ahluwalia, former chairman of erstwhile planning commission, on Friday suggested that GST council should put cleaning up of multiplicity of rates in GST on their agenda as multiple rates would create disputes.

“All the countries that have adopted GST in the last two decades have got either one or two rates. We, on other hand, will have five rates. Apart from 5%,12%,18% and 28% slabs, there will be a zero rate where half of the commodities will be placed. This is far from ideal GST,” he said while delivering a lecture on ‘Indian Economy-the Challenges Ahead’ at Ahmedabad Management Association.

According to him, ideal GST has some exemptions and one single rate. “Most people believe that GST council has made a lot of progress and pending matters would be resolved soon. GST council should put on their agenda that over the next 3-4 years they will clean up this multiplicity of rates,” he suggested.

The excitement that we are going to have GST has diluted the attention on one fact that quality of GST that we are going to get is not that great. However, even flawed GST will have many advantages, he added.

Terming infrastructure creation and modernisation of tax system as well as unification of the country as one single market as crucial elements for India to continue its growth in coming decade, he said, “India’s average growth rate was 7.6% over the last 13-14 years and the country has capacity to grow by 7.5% or so (in next 10 years). But, there is need to do a lot more than what we have been doing.”

He also cautioned that the current global environment over the next decade would be as supportive of rapid growth for developing countries as it was in last 20 years.

In fact, segment leaders like Maruti Suzuki, Tata Motors and Hero MotoCorp have reported de-growth of 34.3 per cent, 45 per cent and 20 per cent, respectively giving a clear indication of a prolonged slowdown in the sector.